Larger shortfall looms in Colorado budget, and schools are likely to feel the pain
By Tim Hoover The Denver Post
Colorado school districts, already hit with 6 percent cuts in the current fiscal year, could face another reduction after a new budget forecast that shows the state is back in the red.
The potential new cut to schools could come just after districts received federal funding to help offset previous funding decreases.
According to the forecast presented to lawmakers Monday, the state budget is as much as $257 million short in the current fiscal year that ends in June and faces a deficit of almost $1.1 billion in the next fiscal year.
"Get ready," Natalie Mullis, the legislature's chief economist, told lawmakers gathered Monday for the budget briefing. "We're in for a roller-coaster ride."
Mullis said a sluggish economy has resulted in largely flat revenues from sales- and personal income-tax collections.
The sobering news came despite overall improvement in the state's economy.
In total, in order to remain legally balanced in the current, 2010-11 fiscal year, the state will have to fill up to a $256.9 million hole. Gov. Bill Ritter, a Democrat, already filled a nearly $60 million deficit in the current year, relying largely on one-time measures such as tapping cash funds. Now he must bridge an even bigger gap.
"Today's forecasts mean we face even more difficult and unenviable decisions ahead to keep the budget balanced," Ritter said in a statement, "and we'll be making those decisions from a list of options that has grown shorter and shorter since the recession hit."
Colorado's not alone
States across the country have reported shortfalls in the current budget year, collectively facing a cumulative shortfall of $89 billion, according to the National Conference of State Legislatures. As of July, 20 states had reported their estimates of personal income were below previous projections.
Todd Saliman, Ritter's budget director, said the governor is likely to roll out the rebalancing plan by the end of October. Though further cuts to education were avoided during the last budget rebalance in August, that will be less likely this time around, Saliman said.
"I think it'd be difficult to address that $257 million shortfall without impacting K-12," Saliman said. "That being said, the governor continues to want to minimize the impact on higher ed and K-12."
Colorado K-12 schools received about $156 million in federal funding for education jobs that Congress approved in August. That money could have helped offset a $260 million net reduction in state aid to schools that lawmakers approved earlier this year.
Now though, the federal funds might have to simply keep schools from slipping further in the current year.
Ken DeLay, executive director of the Colorado Association of School Boards, said the prospect of additional cuts was disheartening.
"We think, of course, the state is already out of compliance with constitutional requirements, namely Amendment 23," DeLay said.
That amendment requires funding for education to increase every year by at least the rate of inflation. However, in making the cuts to schools earlier this year, Ritter and the Democratic-controlled legislature relied on a legal opinion sought years earlier by Republicans that allowed for cuts to education above a base per-pupil funding level.
State support for higher education fell from a $706 million appropriation in 2009-10 to $644.5 million in the current fiscal year. But the state only reached the $706 million level the year before with $382 million in federal stimulus money and then used $89.2 million in stimulus money the next year.
With no stimulus money available for the 2011-12 year, the cuts to higher education also could be steep.
Saliman said that to help fill the new shortfall in the current year, the state also is likely to tap into $40 million in severance-tax funds that Ritter in August ordered not be spent.
Ritter's office must present a 2011-12 spending plan to the legislature's Joint Budget Committee by Nov. 1.
Because caseload growth from Medicaid and other programs that could top $300 million and because $552.7 million in federal stimulus funds and other one-time sources of money will no longer be available, the shortfall for 2011-12 is approaching $1.1 billion, Mullis said.
GOP criticizes spending
Republicans responded to the latest budget forecast by saying Ritter and legislative Democrats must stop an "unsustainable" level of spending.
"It is time we identify and budget to the core functions of government to reduce the cost of government," said state Sen. Scott Renfroe, R-Greeley, who offered no places to cut the budget.
The new budget problems come just as the state's economy, which has been better than the national average throughout the recession, is showing signs of "a slow recovery."
"After two years of job losses, the state's private sector began adding workers in June and July," the economic forecast from legislative analysts said.
Tim Hoover: 303-954-1626 or thoover@denverpost.comRead more: Larger shortfall looms in Colorado budget, and schools are likely to feel the pain - The Denver Post http://www.denverpost.com/legislature/ci_16129515#ixzz10ARRtctZ